Majority of Board Members of Crypto Exchanges Must be Citizens: Indonesia’s New Rules
Indonesia is tightening regulations for crypto exchanges in a move that will provide more control to the local citizens. In its revisions, the government said at least two-thirds of executives on crypto exchanges must be Indonesian residents, among other things.
Indonesia to Tighten Regulations for Crypto Exchanges Following Terraform Labs and Zipmex Collapses
The Indonesian government introduced revisions to tighten regulations over crypto exchanges in the country, saying that at least two-thirds of the exchanges’ management “must be Indonesians residing in the country,” Bloomberg reports. The move is aimed at bolstering user protection and providing more control to the locals.
Additionally, the revisions come as Asian governments struggle to reach crypto founders and ask for their cooperation concerning recent investigations. Do Kwon, co-founder of the collapsed Terraform Labs recently left Singapore, forcing South Korean prosecutors to tap Interpol to arrest him.
“That way, at least we can stop them from fleeing the country if any problem arises,” said Didid Noordiatmoko, acting head of the trade ministry and commodity futures trading regulatory agency. Noordiatmoko did not specify when the revised regulations will come into effect.
According to Reuters, Indonesia’s revisions to the regulations are also in part due to financial issues faced by crypto exchanges in the region such as the Singapore-based Zipmex, which filed for bankruptcy earlier this year amid the crypto sell-off. The crypto winter has also taken a toll on several other major crypto firms including Celsius Network and Three Arrows Capital, both of which also fell into bankruptcy.
“We don’t want to give permits (to exchanges) carelessly, so only for those that meet the requirements and are credible.”– Jerry Sambuaga, Deputy Trade Minister of Indonesia
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Indonesian Exchanges Banned from Reinvesting Crypto and Must Store Funds in 3rd Party Bank Accounts
In addition to the two-thirds rule, the Indonesian authorities also outlined several other revisions. For example, the government will now require local crypto exchanges to store client funds in third-party bank accounts.
Moreover, the government will prohibit exchanges from reinvesting crypto assets, while the minimum capital requirement for crypto bourses will be gradually doubled to 100 billion rupiahs ($6.7 billion) in accordance with their growth.
Earlier this month, Indonesia announced plans to launch a crypto stock exchange by the end of 2022 in an effort to protect consumers from scams and frauds. The platform was initially due to launch in 2021, but the move was postponed due to the complexity of the process.
Do you think Indonesia’s revised rules will impede the growth of local crypto exchanges? Let us know in the comments below.